May 2013 Flash Report

“Mixed” remains an apt characterization of US economic data. Job ranks swelled last month, with comparable gains expected in May’s survey. The 7.5% US unemployment rate, however, is unacceptably high while Eurozone employment is trending the wrong way. 1st quarter US GDP growth came in slightly lower than originally estimated (2.4% versus the prior estimate of 2.5%). Consumer spending fell unexpectedly in April for the first time in almost a year while consumer confidence hit 6-year highs, driven by rising stock market valuations and home prices that reinforced a sense of prosperity (what the Fed refers to as the “wealth effect”). May’s biggest financial headline was Ben Bernanke’s message to Congress suggesting we might soon see the beginning of the end of the quantitative easing era … or not. This equivocation regarding the future of QE injected a large dose of uncertainty into the global capital markets, prompting most stocks and bonds to close out the month sharply down.